A Parcelforce worker delivering packages in London. The report claims the company required drivers to sign contracts forbidding them from challenging their employment status.
Photograph: Alamy

The government has been urged to stage an “emergency intervention” to protect gig economy workers, amid concerns they are being forced into contracts that sometimes pay less than £2.50 an hour and can be cancelled at any moment.

The allegations are detailed in the latest report by the former work and pensions committee chair, Frank Field MP, into the gig economy, where people work flexible hours on short-term or freelance contracts without the rights of permanent employees.

Field’s report comes nine months after Theresa May promised in her maiden party conference speech as prime minister to “make sure that, in our modern and flexible economy, people are properly protected at work”.

Its findings are likely to intensify scrutiny of a government-backed review by former Tony Blair adviser Matthew Taylor into modern employment practices, which is expected to be published early next week.

Field’s report focuses on firms including Parcelforce, DPD, and – for the first time – British Car Auctions, owner of webuyanycar.com.

Field also claimed that Parcelforce, owned by Royal Mail, “tied each driver’s hands behind their back” by requiring them to sign a contract forbidding them from challenging their employment status.

He said the clause – which echoes a similar passage dropped by Deliveroo after a backlash from couriers – was “symptomatic of the threatening and hostile environment in which some people are required to work”.

He added that such contracts were “too often characterised by poverty wages, chronic insecurity and appalling treatment”, with terms designed to subsidise company profits.

The report cites testimony from some of Parcelforce’s 3,000 couriers, about a quarter of whom are self-employed owner-drivers who are paid per delivery and must fund their own vehicle, fuel, insurance and uniform.

Many of the owner-drivers, it says, were persuaded to give up their status as full employees – which granted them superior workers’ rights – on the promise of better pay and more flexibility.

Two Parcelforce drivers told Field “we are frequently warned we could lose our jobs if we don’t do as we’re told”, while a DPD driver said “conditions of employment are precarious, to say the least”.

The report said drivers were “coming to work with broken bones” to avoid fines of up to £400 a day for failing to work their shifts. One Parcelforce courier said he paid for a colleague to join him on deliveries “whilst I sat next to him with a bucket in case I was sick”.

It said owner-drivers could expected “significant returns” of an average £39,400 after running costs.

“Many of our self-employed owner-drivers are substantial businesses in their own right. For this reason, Parcelforce Worldwide sets out the contractual terms clearly for both the benefit of the company and the owner-drivers. Self-employed owner-drivers do not therefore receive the benefits of employment such as sick pay, pension and holiday pay.”

A Royal Mail spokesman said: “As a responsible business, we treat all of our business partners with fairness and respect. At Parcelforce Worldwide, 75 per cent of our drivers are employees. They have amongst the best terms and conditions in our industry.

“The parcels market is highly competitive. It is becoming ever more so. In the early 2000s, Parcelforce Worldwide had to adapt its business model to remain in business and employees were offered enhanced voluntary redundancy terms. At that time, with the agreement of our union, we also introduced self-employed owner-driver contracts. Employees who took enhanced voluntary redundancy were able to tender for these if they wished.”

Couriers for DPD said the requirement to cover the cost of a replacement driver when they are ill meant they could end up losing money.

One said a colleague earned £2,100 in four weeks, but ended up being charged £2,800 due to costs such as petrol and insurance, as well as “fines because he was too poorly to drive the van”.

Couriers for DPD said the requirement to cover the cost of a replacement driver when they are ill meant they could lose money. Photograph: Alamy Stock Photo

Another driver for DPD, which made a pre-tax profit of £125m last year, said: “They are quick to brag about how much profit the company makes, but this is at the expense of not treating its drivers properly.”

One driver for British Car Auctions claimed the terms of his self-employment contract meant he often ended up being paid a fraction of the “national living wage” of £7.20 for over-25s.

“I, along with all other self-employed drivers, have been paid as little as £2.22 per hour.

BCA will argue that we are self-employed and paid per car, but does that give them the right to pay third-world wages?”

Field added: “The poverty pay and shoddy treatment meted out to some of those workers is, sadly, inevitable in the absence of statutory minimum standards in the gig economy. That generates huge profits while minimising tax payments.”

DPD and BCA did not return requests for comment.

Field said the evidence gathered for the report showed that companies should be forced to prove staff are self-employed – reversing existing labour laws, where the onus is on staff to prove their status.

“We believe such moves are necessary to bring to an end the current free-for-all whereby an unknown number of workers on low incomes are, in effect, subsidising the companies with whom they work,” the report says.

He also called for a more immediate “emergency intervention” to guarantee labour rights, particularly a minimum income.

Several high-profile cases involving firms such as Uber and CitySprint have seen staff argue that they should be classed as workers, an official classification that carries additional rights to independent contractors, including a minimum wage and holiday pay.

What the drivers say...

...on ‘threats’ and insecurity

“Conditions of employment are precarious to say the least. The communication received from DPD always has a threatening edge to it as they know people worry about their jobs.” – DPD driver

“I have been fined over £400 for being too sick to get to work for just one day and once I had to pay for a company employee’s overtime to come out on route with me whilst I sat next to him with a bucket in case I was sick.” – Parcelforce driver

...on ‘poverty pay’

“I, along with all other self-employed drivers, have been paid as little as £2.22 per hour. £3/£4/£5 per hour is not unusual and is probably the norm. BCA will argue that we are self-employed and paid per car, but does that give them the right to pay third-world wages?” – British Car Auctions driver

“While profits soar, we as drivers get exploited, underpaid and taken for granted.” – DPD driver

...on flexibility

“I cannot see if you are told how, when and what to do you can be truly self-employed. If [you] say ‘no’ to them you are threatened with contract cancellation and if you question them then you are told that you can always leave as someone else can take [your] place.” – Parcelforce driver

“If you work at the same depot every day, wear a DPD uniform, drive a DPD van, get given a DPD scanner, are told by DPD management what parcels to deliver at what rate, don’t work for anyone else, you legally should be protected by the government as being employed.” – DPD driver

...on the impact on workers’ lives

“If I fail to turn up to work I can get fined up to £400 a day. I recently had to go into work after sitting up all night with my mother until she died – and then do a 12-hour day.” – Parcelforce driver

“This isn’t self-employment, or employment either. It’s a living hell, a nightmare scenario and the government needs to bring in legislation to stop these crooks from ripping off vulnerable people.” – DPD driver.